Thursday, October 18, 2012

Calling the uncertain future of Central Appalachian coal mining the “elephant in the room,” industry consultant Alan Stagg said he expects mining in the high-cost region to cease in the next 10 to 20 years. Speaking at Platts Coal Marketing Days on Sept. 21, Stagg said producers in Central Appalachia need to accept that difficult physical mining conditions, combined with inescapable regulatory restrictions, will soon erase profitability.

“This is the elephant in the room. No one wants to acknowledge that reserve depletion is profound,” said Stagg, president and CEO of Stagg Resource Consultants Inc. “Mining conditions are difficult, and the cost to produce is high. That is a physical fact. It’s not pleasant. Nobody wants to acknowledge it. That is a fact, and companies that ignore that fact will not do so well.” [...]

“Are recent regulatory pressures a straw man in addressing problems facing the coal industry?” he asked. “Even if U.S. coal companies got all of their permits, what would they do with them? You cannot sell that coal at $40, $45 or even $50 per ton.”

Blaming treehuggers is way easier than admitting to your investors, consumers & policy-makers that you picked all the low-hanging fruit decades ago & every remaining ton of coal (or barrel of oil) will be increasingly expensive to extract.

Meanwhile Reuters reports, "Asian economies, hungry for coal, stand to gain from a U.S. program meant to keep domestic power cheap and abundant." How much is at stake? "One analyst concludes that the federal government missed out on nearly $30 billion in revenue over the last three decades through poor management of the coal lease program."

Talk about picking winners & losers! How much better off would we be right now if the government had let the free market decide our power sources & just cut $30 billion in checks directly to help Americans pay their power bills?

Eliminating coal subsidies now would be a small step towards making things right - but right now, it sounds like coal companies need all the government welfare they can get.